Subject:  TOIBB v. RADLOFF, Syllabus



 
    NOTE: Where it is feasible, a syllabus (headnote) will be released, as
is being done in connection with this case, at the time the opinion is
issued.  The syllabus constitutes no part of the opinion of the Court but
has been prepared by the Reporter of Decisions for the convenience of the
reader.  See United States v. Detroit Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES


Syllabus



TOIBB v. RADLOFF


certiorari to the united states court of appeals for the eighth circuit

No. 90-368.  Argued April 22, 1991 -- Decided June 13, 1991

Petitioner Toibb filed a voluntary petition for relief under Chapter 7 of
the Bankruptcy Code, disclosing, inter alia, assets that included stock in
an electric power company.  When he discovered that the stock had
substantial value, he decided to avoid its liquidation by moving to convert
his Chapter 7 case to one under Chapter 11's reorganization provisions.
After the Bankruptcy Court granted his motion, and he filed his
reorganization plan, that court dismissed his petition, finding that he did
not qualify for relief under Chapter 11 because he was not engaged in an
ongoing business.  The District Court and the Court of Appeals affirmed.

Held: The Bankruptcy Code's plain language permits individual debtors not
engaged in business to file for relief under Chapter 11.  Toibb is a debtor
within the meaning of MDRV 109(d), which provides that "a person who may be
a debtor under chapter 7 . . . except a stockbroker or a commodity broker,
and a railroad may be a debtor under chapter 11."  He is a person who may
be a Chapter 7 debtor, since only railroads and various financial and
insurance institutions are excluded from Chapter 7's coverage, and MDRV
109(d) makes Chapter 11 available to all entities eligible for Chapter 7
protection, other than stockbrokers and commodities brokers.  Although
Chapter 11's structure and legislative history indicate that it was
intended primarily for the use of business debtors, the Code contains no
ongoing business requirement for Chapter 11 reorganization; and there is no
basis, including underlying policy considerations, for imposing one.  Pp.
3-9.

902 F. 2d 14, reversed.
Blackmun, J., delivered the opinion of the Court, in which Rehnquist, C.
J., and White, Marshall, O'Connor, Scalia, Kennedy, and Souter, JJ.,
joined.  Stevens, J., filed a dissenting opinion.

------------------------------------------------------------------------------




Subject: 90-368 -- OPINION, TOIBB v. RADLOFF

 


NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.
SUPREME COURT OF THE UNITED STATES


No. 90-368



SHELDON BARUCH TOIBB, PETITIONER v.
STUART J. RADLOFF


on writ of certiorari to the united states court of appeals for the eighth
circuit

[June 13, 1991]



    Justice Blackmun delivered the opinion of the Court.
    In this case we must decide whether an individual debtor not engaged in
business is eligible to reorganize under Chapter 11 of the Bankruptcy Code,
11 U. S. C. MDRV 1101 et seq.

I
    From March 1983 until April 1985, petitioner Sheldon Baruch Toibb, a
former staff attorney with the Federal Energy Regulatory Commission, was
employed as a consultant by Independence Electric Corporation (IEC), a
company he and two others organized to produce and market electric power.
Petitioner owns 24 percent of the company's shares.  After IEC terminated
his employment, petitioner was unable to find work as a consultant in the
energy field; he has been largely supported by his family and friends since
that time.
    On November 18, 1986, petitioner filed in the United States Bankruptcy
Court for the Eastern District of Missouri a voluntary petition for relief
under Chapter 7 of the Code, 11 U. S. C. MDRV 701 et seq.  The Schedule of
Assets and Liabilities accompanying petitioner's filing disclosed no
secured debts, a disputed federal tax priority claim of $11,000, and
unsecured debts of $170,605. {1}  Petitioner listed as nonexempt assets his
IEC shares and a possible claim against his former business associates.  He
stated that the market value of each of these assets was unknown.
    On August 6, 1987, the Chapter 7 Trustee appointed to administer
petitioner's estate notified the creditors that the Board of Directors of
IEC had offered to purchase petitioner's IEC shares for $25,000.  When
petitioner became aware that this stock had such value, he decided to avoid
its liquidation by moving to convert his Chapter 7 case to one under the
reorganization provisions of Chapter 11.
    The Bankruptcy Court granted petitioner's conversion motion, App. 21,
and on February 1, 1988, petitioner filed a plan of reorganization.  Id.,
at 70.  Under the plan, petitioner proposed to pay his unsecured creditors
$25,000 less admin istrative expenses and priority tax claims, a proposal
that would result in a payment of approximately 11 cents on the dollar.  He
further proposed to pay the unsecured creditors, for a period of six years,
50 percent of any dividends from IEC or of any proceeds from the sale of
the IEC stock, up to full payment of the debts.
    On March 8, 1988, the Bankruptcy Court on its own motion ordered
petitioner to show cause why his petition should not be dismissed because
petitioner was not engaged in business and, therefore, did not qualify as a
Chapter 11 debtor.  App. 121.  At the ensuing hearing, petitioner
unsuccessfully attempted to demonstrate that he had a business to
reorganize. {2}  Petitioner also argued that Chapter 11 should be available
to an individual debtor not engaged in an ongoing business.  On August 1,
the Bankruptcy Court ruled that, under the authority of Wamsganz v.
Boatmen's Bank of De Soto, 804 F. 2d 503 (CA8 1986), petitioner failed to
qualify for relief under Chapter 11.  App. to Pet. for Cert. A-17 and
A-19.
    The United States District Court for the Eastern District of Missouri,
also relying on Wamsganz, upheld the Bankruptcy Court's dismissal of
petitioner's Chapter 11 case.  App. to Pet. for Cert. A-8 and A-9.  The
United States Court of Appeals for the Eighth Circuit affirmed, holding
that the Bankruptcy Court had the authority to dismiss the proceeding sua
sponte, and that the Circuit's earlier Wams ganz decision was controlling.
In re Toibb, 902 F. 2d 14 (1990). {3}  Because the Court of Appeals' ruling
that an individual nonbusiness debtor may not reorganize under Chapter 11
clearly conflicted with the holding of the Court of Appeals for the
Eleventh Circuit in In re Moog, 774 F. 2d 1073 (1985), we granted
certiorari to resolve the conflict. {4}  --- U. S. --- (1991).

II


A
    In our view, the plain language of the Bankruptcy Code disposes of the
question before us.  Section 109, 11 U. S. C. MDRV 109, defines who may be
a debtor under the various chapters of the Code.  Section 109(d) provides:
"Only a person that may be a debtor under chapter 7 of this title, except a
stockbroker or a commodity broker, and a railroad may be a debtor under
chapter 11 of this title."  Section 109(b) states: "A person may be a
debtor under chapter 7 of this title only if such person is not -- (1) a
railroad; (2) a domestic insurance company, bank, . . . ; or (3) a foreign
insurance company, bank, . . . engaged in such business in the United
States."  The Code defines "person" as used in Title 11 to "includ[e] [an]
individual."  MDRV 101(35).  Under the express terms of the Code,
therefore, petitioner is "a person who may be a debtor under chapter 7" and
satisfies the statutory requirements for a Chapter 11 debtor.
    The Code contains no ongoing business requirement for reorganization
under Chapter 11, and we are loath to infer the exclusion of certain
classes of debtors from the protections of Chapter 11, because Congress
took care in MDRV 109 to specify who qualifies -- and who does not qualify
-- as a debtor under the various chapters of the Code.  Section 109(b)
expressly excludes from the coverage of Chapter 7 railroads and various
financial and insurance institutions.  Only municipalities are eligible for
the protection of Chapter 9.  MDRV 109(c).  Most significantly, MDRV 109(d)
makes stockbrokers and commodities brokers ineligible for Chapter 11
relief, but otherwise leaves that Chapter available to any other entity
eligible for the protection of Chapter 7.  Congress knew how to restrict
recourse to the avenues of bankruptcy relief; it did not place Chapter 11
reorganization beyond the reach of a nonbusiness individual debtor.

B
    The Amicus Curiae in support of the Court of Appeals' judgment
acknowledges that Chapter 11 does not expressly exclude an individual
nonbusiness debtor from its reach.  He echoes the reasoning of those courts
that have engrafted an ongoing-business requirement onto the plain language
of MDRV 109(a) and argues that the statute's legislative history and
structure make clear that Chapter 11 was intended for business debtors
alone.  See, e. g., Wamsganz v. Boatmen's Bank of De Soto, 804 F. 2d, at
505 ("The legislative history of the Bankruptcy Code, taken as a whole,
shows that Congress meant for chapter 11 to be available to businesses and
persons engaged in business, and not to consumer debtors").  We find these
arguments unpersuasive for several reasons.
    First, this Court has repeated with some frequency: "Where, as here,
the resolution of a question of federal law turns on a statute and the
intention of Congress, we look first to the statutory language and then to
the legislative history if the statutory language is unclear."  Blum v.
Stenson, 465 U. S. 886, 896 (1984).  The language of MDRV 109 is not
unclear.  Thus, although a court appropriately may refer to a statute's
legislative history to resolve statutory ambiguity, there is no need to do
so here.
    Second, even were we to consider the sundry legislative comments urged
in support of a congressional intent to exclude a nonbusiness debtor from
Chapter 11, the scant history on this precise issue does not suggest a
"clearly expressed legislative inten[t] . . . contrary . . ." to the plain
language of MDRV 109(d).  See Consumer Product Safety Comm'n v. GTE
Sylvania, Inc., 447 U. S. 102, 108 (1980).  The Amicus does point to the
following statement in a House report:

    "Some consumer debtors are unable to avail themselves of the relief
provided under chapter 13.  For these debtors, straight bankruptcy is the
only remedy that will enable them to get out from under the debilitating
effects of too much debt."  H. R. Rep. No. 95-595, p. 125 (1977).


Petitioner responds with the following excerpt from a later Senate report:

    "Chapter 11, Reorganization, is primarily designed for businesses,
although individuals are eligible for relief under the chapter.  The
procedures of chapter 11, however, are sufficiently complex that they will
be used only in a business case and not in the consumer context."  S. Rep.
No. 95-989, p. 3 (1978).


These apparently conflicting views tend to negate the suggestion that the
Congress enacting the current Code operated with a clear intent to deny
Chapter 11 relief to an individual nonbusiness debtor.
    Finally, we are not persuaded by the contention that Chapter 11 is
unavailable to a debtor without an ongoing business because many of the
Chapter's provisions do not apply to a nonbusiness debtor.  There is no
doubt that Congress intended that a business debtor be among those who
might use Chapter 11.  Code provisions like the ones authorizing the
appointment of an equity security holders' committee, MDRV 1102, and the
appointment of a trustee "for cause, including fraud, dishonesty,
incompetence, or gross mismanagement of the affairs of the debtor by
current management . . . ," MDRV 1104(a)(1), certainly are designed to aid
in the rehabilitation of a business.  It does not follow, however, that a
debtor whose affairs do not warrant recourse to these provisions is
ineligible for Chapter 11 relief.  Instead, these provisions -- like the
references to debtor businesses in the Chapter's legislative history --
reflect an understandable expectation that Chapter 11 would be used
primarily by debtors with ongoing businesses; they do not constitute an
additional prerequisite for Chapter 11 eligibility beyond those established
in MDRV 109(d).

III
    Although the foregoing analysis is dispositive of the question
presented, we deal briefly with Amicus' contention that policy
considerations underlying the Code support inferring a congressional intent
to preclude a nonbusiness debtor from reorganizing under Chapter 11.
First, it is said that bringing a consumer debtor within the scope of
Chapter 11 does not serve Congress' purpose of permitting business debtors
to reorganize and restructure their debts in order to revive the debtors'
businesses and thereby preserve jobs and protect investors.  This argument
assumes that Congress had a single purpose in enacting Chapter 11.
Petitioner suggests, however, and we agree, that Chapter 11 also embodies
the general Code policy of maximizing the value of the bankruptcy estate.
See Commodity Futures Trading Comm'n v. Weintraub, 471 U. S. 343, 351-354
(1985).  Under certain circumstances a consumer debtor's estate will be
worth more if reorganized under Chapter 11 than if liquidated under Chapter
7.  Allowing such a debtor to proceed under Chapter 11 serves the
congressional purpose of deriving as much value as possible from the
debtor's estate.
    Second, Amicus notes that allowing a consumer debtor to proceed under
Chapter 11 would permit the debtor to shield both disposable income and
nonexempt personal property.  He argues that the legislative history of
Chapter 11 does not reflect an intent to offer a consumer debtor more
expansive protection than he would find under Chapter 13, which does not
protect disposable income, or Chapter 7, which does not protect nonexempt
personal assets.  As an initial matter, it makes no difference whether the
legislative history affirmatively reflects such an intent, because the
plain language of the statute allows a consumer debtor to proceed under
Chapter 11.  Moreover, differences in the requirements and protections of
each Chapter reflect Congress' appreciation that various approaches are
necessary to address effectively the disparate situations of debtors
seeking protection under the Code.
    Amicus does not contend that allowing a consumer debtor to reorganize
under Chapter 11 will leave the debtor's creditors in a worse position than
if the debtor were required to liquidate.  See Tr. of Oral Arg. 29-31.  Nor
could he.  Section 1129(a)(7) provides that a reorganization plan may not
be confirmed unless all the debtor's creditors accept the plan or will
receive not less than they would receive under a Chapter 7 liquidation.
Because creditors cannot be expected to approve a plan in which they would
receive less than they would from an immediate liquidation of the debtor's
assets, it follows that a Chapter 11 reorganization plan usually will be
confirmed only when creditors will receive at least as much as if the
debtor were to file under Chapter 7.  Absent some showing of harm to the
creditors of a nonbusiness debtor allowed to reorganize under Chapter 11,
we see nothing in the allocation of "burdens" and "benefits" of Chapter 11
that warrants an inference that Congress intended to exclude a consumer
debtor from its coverage.  See Herbert, Consumer Chapter 11 Proceedings:
Abuse or Alternative?, 91 Com. L. J. 234, 245-248 (1986).
    Amicus also warns that allowing consumer debtors to proceed under
Chapter 11 will flood the bankruptcy courts with plans of reorganization
that ultimately will prove unworkable.  We think this fear is unfounded for
two reasons.  First, the greater expense and complexity of filing under
Chapter 11 likely will dissuade most consumer debtors from seeking relief
under this Chapter.  See S. Rep. No. 95-989, at 3; see also Herbert, supra,
at 242-243.  Second, the Code gives bankruptcy courts substantial
discretion to dismiss a Chapter 11 case in which the debtor files an
untenable plan of reorganization.  See 15 1112(b) and 1129(a).
    Finally, Amicus asserts that extending Chapter 11 to consumer debtors
creates the risk that these debtors will be forced into Chapter 11 by their
creditors under MDRV 303(a), a result contrary to the intent reflected in
Congress' decision to prevent involuntary bankruptcy proceedings under
Chapter 13.  In particular, he suggests that it would be unwise to force a
debtor into a Chapter 11 reorganization, because an involuntary debtor
would be unlikely to cooperate in the plan of reorganization -- a point
that Congress noted in refusing to allow involuntary Chapter 13
proceedings.  See H. R. Rep. No. 95-595, at 120.
    We find these concerns overstated in light of the Code's provisions for
dealing with recalcitrant Chapter 11 debtors.  If an involuntary Chapter 11
debtor fails to cooperate, this likely will provide the requisite "cause"
for the bankruptcy court to convert the Chapter 11 case to one under
Chapter 7.  See MDRV 1112(b).  In any event, the argument overlooks
Congress' primary concern about a debtor's being forced into bankruptcy
under Chapter 13: that such a debtor, whose future wages are not exempt
from the bankruptcy estate, MDRV 1322(a)(1), would be compelled to toil for
the benefit of creditors in violation of the Thirteenth Amendment's
involuntary servitude prohibition.  See H. R. Rep. No. 95-595, at 120.
Because there is no comparable provision in Chapter 11 requiring a debtor
to pay future wages to a creditor, Congress' concern about imposing
involuntary servitude on a Chapter 13 debtor is not relevant to a Chapter
11 reorganization.

IV
    The plain language of the Bankruptcy Code permits individual debtors
not engaged in business to file for relief under Chapter 11.  Although the
structure and legislative history of Chapter 11 indicate that this Chapter
was intended primarily for the use of business debtors, the Code contains
no "ongoing business" requirement for Chapter 11 reorganization, and we
find no basis for imposing one.  Accordingly, the judgment of the Court of
Appeals is reversed.

It is so ordered.


 
 
 
 
 


------------------------------------------------------------------------------
1
    Because petitioner's unsecured debts exceeded $100,000 and he had no
regular income, he was ineligible to proceed under Chapter 13 of the Code,
11 U. S. C. MDRV 1301 et seq.  See MDRV 109(e).

2
    Petitioner does not seek further review of the question whether he is
engaged in an ongoing business.

3
    The Eighth Circuit also agreed with what it regarded as the supporting
precedent of In re Little Creek Development Co., 779 F. 2d 1068 (CA5 1986),
and In re Winshall Settlor's Trust, 758 F. 2d 1136 (CA6 1985).

4
    The named respondent, Stuart J. Radloff, was dismissed as Chapter 7
Trustee when the Bankruptcy Court converted petitioner's case to one under
Chapter 11.  Mr. Radloff did not participate in the proceedings before the
Court of Appeals and refrained from responding to Mr. Toibb's petition for
certiorari filed with this Court.  We therefore specifically requested the
United States Trustee, see 28 U. S. C. MDRV 581(a)(13), to respond.  In
doing so, the United States Trustee indicated his agreement with
petitioner's position and suggested that, if this Court decided to review
the case, it might wish to appoint counsel to defend the Eighth Circuit's
judgment.  We then invited James Hamilton, Esq., of Washington, D. C., a
member of the Bar of this Court, to serve as amicus curiae in support of
the judgment of the Court of Appeals.  --- U. S. --- (1991).  Mr. Hamilton
accepted this appointment and has well fulfilled this assigned
responsibility.





Subject: 90-368 -- DISSENT, TOIBB v. RADLOFF

 


    SUPREME COURT OF THE UNITED STATES


No. 90-368



SHELDON BARUCH TOIBB, PETITIONER v.
STUART J. RADLOFF


on writ of certiorari to the united states court of appeals for the eighth
circuit

[June 13, 1991]



    Justice Stevens, dissenting.
    The Court's reading of the statute is plausible.  It is supported by
the omission of any prohibition against the use of Chapter 11 by consumer
debtors and by the excerpt from the introduction to the Senate Report,
quoted ante, at 5-6.  Nevertheless, I am persuaded that the Court's reading
is incorrect.  Two chapters of the Bankruptcy Code -- Chapter 7, entitled
"Liquidation," 11 U. S. C. MDRV 701 et seq., and Chapter 13, entitled
"Adjustment of Debts of an Individual With Regular Income," MDRV 1301 et
seq. -- unquestionably and unambiguously authorize relief for individual
consumer debtors.  Chapter 11, entitled "Reorganization," MDRV 1101 et
seq., was primarily designed to provide relief for corporate debtors but
also unquestionably authorizes relief for individual proprietors of
business enterprises.  When the statute is read as a whole, however, it
seems quite clear that Congress did not intend to authorize a
"reorganization" of the affairs of an individual consumer debtor.
    Section 109(d) places a limit on the class of persons who may be a
debtor under Chapter 11, but it does not state that all members of that
class are eligible for Chapter 11 relief. {1}  It states that "only a
person that may a debtor under Chapter 7 . . . may be a debtor under
Chapter 11 . . . ."  (Emphasis added.)  It does not, however, state that
every person entitled to relief under Chapter 7 is also entitled to relief
under Chapter 11.  In my judgment, the word "only" introduces sufficient
ambiguity to justify a careful examination of other provisions of the Act,
as well as the legislative history.
    This examination convinces me that consumer debtors may not avail
themselves of Chapter 11.  The repeated references to the debtor's
"business,"  {2} "the operation of the debtor's business,"  {3} and the
"current or former management of the debtor"  {4} make it abundantly clear
that the principal focus of the chapter is upon business reorganizations.
This conclusion is confirmed by the discussion of Chapter 11 in the Senate
Report, which describes the provision as a "chapter for business
reorganization" and repeatedly refers to a "business" as the subject of
Chapter 11 relief. {5}  See also 124 Cong. Rec. 34007 (1978) (Chapter 11 is
a "consolidated approach to business rehabilitation") (statement of Sen.
DeConcini).
    The House Report, however, is more significant because it emphasizes
the relationship between different chapters of the Code.  The Report
unambiguously states that a Chapter 7 liquidation is "the only remedy" for
"consumer debtors [who] are unable to avail themselves of the relief
provided under chapter 13."  H. R. Rep. No. 95-595, p. 125 (1977).  See
also 124 Cong. Rec., at 32392, 32405 (Chapter 11 is "a consolidated
approach to business rehabilitation" and a "new commercial reorganization
chapter") (statement of Rep. Edwards).  The accuracy of the statement in
the House Report is confirmed by a comparison of the text of Chapter 11
with the text of Chapter 13.
    Above, I noted the striking difference between the chapter titles --
"Reorganization" for Chapter 11 as opposed to "Adjustment of Debts of an
Individual With Regular Income" for Chapter 13.  Also significant is the
conspicuous omission from Chapter 11 of both an important limit and an
important protection included in Chapter 13.  Chapter 13 relief is only
available to individuals whose unsecured debts amount to less than $100,000
and whose secured debts are less than $350,000.  See 11 U. S. C. MDRV
109(e).  Chapter 11 contains no comparable limit.  Congress would have
accomplished little in imposing this limit on the adjustment of individual
consumer debt through Chapter 13 if Congress at the same time allowed the
individual to avoid the limitation by filing under Chapter 11. {6}
    More important, the Code expressly provides that involuntary
proceedings can only be instituted under Chapter 7 and Chapter 11.  See 11
U. S. C. MDRV 303(a).  A creditor therefore may not force an individual
consumer debtor into an involuntary Chapter 13 proceeding.  Under the
Court's reading of the Act, however, a creditor could institute an
involuntary proceeding under Chapter 11 against any individual with regular
income.  It seems highly unlikely that Congress intended to subject
individual consumer debtors, such as pensioners, to involuntary Chapter 11
proceedings while at the same time prohibiting involuntary Chapter 13
proceedings against the same class of debtors.
    For these reasons, notwithstanding the excerpt from the Senate Report
on which the Court relies, I would, in accordance with the clear statement
in the House Report, read the statute as a whole to limit Chapter 11 relief
to business debtors.  I therefore respectfully dissent.

 
 
 
 
 

------------------------------------------------------------------------------
1
    Section 109(d) provides:
    "Only a person that may be a debtor under chapter 7 of this title,
except a stockholder or a commodity broker, and a railroad may be a debtor
under Chapter 11 of this title."  11 U. S. C. MDRV 109(d) (emphasis
added).

2
    See e. g., 15 1101(2)(B), 1108.

3
    See e. g., 15 1103(c)(2), 1105, 1106(a)(3).

4
    See MDRV 1104(b).

5
    The Senate Report contains the following explanation of Chapter 11
reorganizations:

    "Chapter 11 deals with the reorganization of a financially distressed
business enterprise, providing for its rehabilitation by adjustment of its
debt obligations and equity interests.  It should be distinguished from the
bankruptcy liquidation under chapter 7 or the adjustment of the debts of an
individual with regular income under chapter 13.
    "Chapter 11 replaces chapters X, XI and XII of the Bankruptcy Act,
Chapter 11 also includes special provisions for railroads in view of the
impact of regulatory laws on railroad debtors and replaces section 77 of
the Bankruptcy Act.  A single chapter for all business reorganizations will
simplify the law by eliminating unnecessary differences in detail that are
inevitable under separately administered statutes.
    "Business reorganizations have been governed principally by chapters X
and XI, both of which have been adopted by the Congress as part of the
bankruptcy reforms in 1938.  These chapters were not intended to be
alternate paths of reorganization; they were to be mutually exclusive.
Chapter X was meant for the reorganization of public companies and chapter
XI for the rehabilitation of small and privately owned businesses.
    "That schematic design was well conceived, but flawed somewhat by the
failure to include a definition of a `public company.'  As a result,
considerable litigation developed, mostly on the initiative of the
Securities and Exchange Commission, over whether a case belonged in chapter
X or chapter XI.  This issue came to the Supreme Court in three cases, the
last one in SEC v. American Trailer Rentals, Inc., 379 U. S. 594 (1965),
but the Court did not enunciate a hard-and-fast rule for all cases.
Although it announced some guidelines, management and creditors of large
public companies have continued to resort to chapter XI.
    "The single chapter for business reorganization, which the bill
provides, will eliminate unprofitable litigation over the preliminary issue
as to which of the two chapters apply. . . .
    "Reorganization, in its fundamental aspects, involves the thankless
task of determining who should share the losses incurred by an unsuccessful
business and how the values of the estate should be apportioned among
creditors and stockholders."  S. Rep. No. 95-989, pp. 9-10 (1978).

6
    Although the Court believes that permitting consumer debtors to avail
themselves of Chapter 11 will not adversely affect their creditors, ante,
at 7-8, I am not so sure.  It takes time and money to determine whether a
plan will provide creditors with benefits equal to those available through
liquidation and still more time and money to find out whether such a
predictive decision turns out to be correct or incorrect.  The "complex"
Chapter 11 process, see S. Rep. No. 95-989, p. 3 (1978), will almost
certainly consume more time and resources than the simpler Chapter 7
procedures.
